Tacoma Ry. & Power Co. v. Pierce County

• Decision Date: 14 September 1910
• Docket Number: 1,332,1,333.,1,331
• Citation: 193 F. 90
• Court: U.S. District Court — Western District of Washington
• Parties: TACOMA RY. & POWER CO. v. PIERCE COUNTY et al. PUGET SOUND POWER CO. v. SAME. OLD COLONY TRUST CO. v. SAME.

193 F. 90

TACOMA RY. & POWER CO. v. PIERCE COUNTY et al.

PUGET SOUND POWER CO. v. SAME.

OLD COLONY TRUST CO. v. SAME.

Nos. 1,331, 1,332, 1,333.

United States Circuit Court, W.D. Washington.

September 14, 1910

On Petition for Rehearing, September 30, 1910.

James B. Howe and Hugh A. Tait, for complainant.

H. G Rowland, Dix H. Rowland, and R. M. Davis, for Pierce County and others.

C. M Riddell, J. W. Quick, C. E. Dunkleberger, and E. B. Brockway for City of Tacoma and others.

HANFORD District Judge.

The gist of the complaints in these cases is alleged discrimination and unfairness in the assessment of property in Pierce county for taxation for the year 1907, which, if not corrected, will impose upon the Tacoma Railway & Power Company and the Puget Sound Power Company an undue proportion of the burden of taxation for state and municipal governments. The suits were commenced before the taxes for that year became due or payable, the object being to restrain the county officers from completing the tax roll as contemplated, but in the prolonged litigation the court has heard no application for a mandatory injunction to compel the officials to make a readjustment of values, or to list for taxation omitted property. The prayer for specific relief in the bill of complaint of the Tacoma Railway & Power Company is for a provisional injunction restraining the defendants from doing any further act to extend the tax complained of upon the assessment books and from doing any act to cloud the title, or to collect the alleged illegal tax during the pendency of the litigation, 'and that, upon the final hearing and determination of this cause, said illegal tax and the assessment upon which it is based be canceled, and the defendants required to enter the cancellation thereof upon said assessment books. ' In the body of the bill, however, the complainant declares its readiness and willingness to pay as soon as it is payable the tax upon all of its property as assessed, except any of the tax upon the arbitrary assessment of its franchises, and that it is ready and willing to pay, and will pay, any amount upon the value of its franchises which is fair and equitable. It is probable that, if the bill had not contained this offer or a declaration of similar import, the litigation would have been ended by the court sustaining a demurrer to the bill. As the issues have been framed, the controversy relates to alleged unfairness in the valuation placed upon the corporate franchises; and the litigation seems to have been conducted upon a theory that the court must, in order to decide the disputed question, make an appraisement of the relative value of said franchises corresponding to the valuation of all other property included in the assessment of property in Pierce county for the year 1907, and of all property in the county omitted from the assessment roll which should have been included, and take notice of undervaluations.

The briefs filed in behalf of the complainants admit that the value of the physical property of the Tacoma Railway & Power Company as shown by the company's books was $5,262,392.17, and the estimated value by three different methods of computation ranges from $5,836,780 to $3,727,230, and that the total value of all of its property, including franchises, per the assessment made for taxation, was $2,038,441, and that the Puget Sound Power Company's property, including its franchises, was assessed for taxation upon a valuation of $1,401,428. These admissions are to be considered in connection with the material facts which in the briefs complainant's counsel claims to have established by the evidence, which are as follows:

'(1) On March 1, 1907, the Tacoma Railway & Power Company was a corporation created under the laws of New Jersey, doing business as a street railway and power company in Pierce county, Wash.

'(2) In 1902 Stone & Webster, of Boston, Mass., became the general managers of the company. The business of Stone & Webster consisted largely of reorganizing unsuccessful street railway and electric properties, financing them, and operating them. In 1907 they managed about 40 different companies in various parts of the United States. The principal management and the financial operations were conducted in Boston, Mass.

'(3) On March 1, 1907, the par value of the capital stock of the railway company was $2,000,000, the bonded debt $1,500,000, bearing interest at the rate of 5 per cent. per annum. The outstanding notes of the company amounted to $1,696,698.47. Of these notes $1,578,441.59 bore interest at the rate of 6 per cent. and $118,256.38 bore interest at the rate of 5 per cent. per annum.

'(4) The railway company owns certain franchises authorizing it to operate upon certain streets of Tacoma and upon certain county roads in Pierce county, which franchises will expire approximately in 1935.

'(5) The railway company had been in existence for a number of years prior to March 1, 1907, but has never paid a dividend upon its stock.

'(6) The net earnings of the railway company for the year ending February 28, 1907, before deducting interest, amounted to $268,760.36. The operating expenses and taxes for the same period amounted to $587,613.94.

'(7) On March 1, 1907, and for several years prior thereto, the power company was a Washington corporation, with a capital stock of the par value of $3,000,000 subscribed and $1,000,000 issued. Its bonded debt was $3,236,000. The bonds were guaranteed by the Seattle Electric Company. The Old Colony Trust Company was the trustee for the bondholders. The power company has never paid a dividend upon its stock.

'(8) On March 1, 1907, the power company in a few places had for short distances its poles upon county roads in Pierce county. It produced electric power, which it sold to public service corporations. It did no public service business itself, except in the town of Orting, from which public service business it derived a gross income of $2,200 a year and a net income of about $500 a year.

'(9) On March 1, 1907, there were hundreds of corporations located and doing business in Pierce county. These corporations consisted of banks, common carriers, and mercantile companies. These companies were assessed upon their physical properties only, no attention being paid in their assessment to their earnings, nor to the amount of their capital stock or indebtedness.

'(10) On March 1, 1907, the only assessments upon the franchises in Pierce county were of the following named companies, in the following named amounts:

Northern Pacific Railway Company ............ $100,000 00

Tacoma Railway & Power Company ............... 895,280 00

Puget Sound Power Company .................... 934,728 00

Tacoma Eastern Railroad ....................... 25,000 00

Sunset Telephone Company ..................... 100,000 00

Pacific Traction Company ...................... 10,000 00

Seattle & Tacoma Railway Company ............. 119,605 00

Postal Telegraph & Cable Company ............... 6,270 00

Tacoma Industrial Company ...................... 1,000 00

Western Union Telegraph Company ............... 15,000 00

Ambrose Petrie Company ......................... 5,000 00

American District Telegraph Company ............ 6,000 00

Tacoma Gas Light Company ..................... 225,964 00

Syndicate Heat & Power Company ................... 800 00

Puget Sound Telephone Construction Company .... 10,000 00

Buckley Electric Company ......................... 300 00

Pacific Messenger Company ...................... 5,000 00

'(11) The total assessment upon all franchises in Pierce county for the year 1907 was $2,459,947. Of this amount $1,830,008 was imposed upon the railway company and the power company. The railway company and the power company were also assessed upon their real estate. The railway company was also assessed in the sum of $1,025,769 upon its tangible personal property and the power company in the sum of...